self-build or renovation mortgages

[mixedupmartha]

Can anyone advise on this? Anyone done it?

We have our house on the market and hope to release equity of about 125k (some of which will be spent on moving costs).

We extended and renovated this property ourselves so we have an idea of what's involved in build costs.

We've seen a house on the market at 380k. It belonged to an old lady who has died and it's in need of total refurbishment. It's livable but it could be an absolute palace with about 120-140k spent on it.

We have approached our mortgage lended (Nationwide) who say they will lend us about 500-600k for a new house but not for this specific project.

They will lend us 95% of the market value of the house (so about 190k if we got it for a lower price). We'd have to fund the work ourselves and our equity wouldn't stretch to it.

With a sale price of (say) 340k and work of 130k (average), the house would have cost 470k. In todays market it would probably fetch 520k so it's a sound investment and it's our "forever home".

Any idea how we can get around the problem with the bank? Specialist mortgage lender - can you then move your mortgage elsewhere afterwards??

sorry I meant they will lend us about 290k against it

We've had the same problem so interested in responses! In our case curretn mortgage lender wouldn't lend extra to fund our large extension as the roof would have been removed. We ended up getting a 2nd charge loan which is just about enough to fund the external work and are hoping that a new valuation once roof has been done will be enough to fund the internal work.

Perhaps try a self-build mortgage where they lend in stages?

As an IFA I have used these guys who were pretty good and may offer what you want.
Buildloan mortgages
Additionally try Colleys Surveyors and ask whether they would approve a survey/property to a mortgage lender. (They deal with Halifax) Colleys surveyors
Otherwise speak to an IFA or mortgage broker they should have experience in this area.

big dad's right - you should talk to an independent mortgage advisor. i'm a property developer with 2 DD's and i've used a guy called clive harries (01609781563) for years. he's helped me get development finance for just the type of thing you're taking about (although for 2m instead!!).

For your situation you'd be looking at getting a development loan and you can normally get 60-70% of the GDV (gross developed value). so if the GDV is 520k and the loan is 70% you can get 364k, plus your equity would get you up to the 470 needed. i'm not sure if that would be just for new build or if they would accept a home improvement project. anyway it would be worth calling clive and discussing what you actually need. he's very good and will only charge you if he gets an offer of funding. plus he's good on other stuff like keeping my DD's trust fund safe!!